Flipkart’s valuation crosses $37.6 bn after raising $3.6 bn in funding

E-commerce company Flipkart Group has raised $3.6 billion in funding in a round led by international groups that included Canada Pension Plan Investment Board (CPP Investments), SoftBank Vision Fund 2 and Tiger Global. The investment values Flipkart at $37.6 billion post-money.

USA’s Walmart last July led a $1.2-billion round in Flipkart, valuing the firm at $24.9 billion. Walmart bought Flipkart bought for $16 billion in 2018 and is now battling Amazon and Reliance’s JioMart for dominance in India’s online retail market. Walmart was part of the latest investing round.

Analysts said the new financing round now makes Flipkart among the 10 largest e-commerce companies in the world by valuation. The list includes players such as Amazon, Alibaba, Shopify, Garena and Pinduoduo. The other such companies include Jingdong Mall, MercadoLibre, Coupang and JD Health.

“At Flipkart, we are committed to transforming the consumer internet ecosystem in India and providing consumers access and value,” said Kalyan Krishnamurthy, chief executive officer, Flipkart Group. “This investment by leading global investors reflects the promise of digital commerce in India and their belief in Flipkart’s capabilities to maximise this potential for all stakeholders.”

One of the key investment themes for CPP Investments has been Asia’s domestic consumption. “We believe India will be a leading source of global growth in the decades ahead, supported by positive demographics, a growing middle class and deepening Internet penetration,” said Agus Tandiono, managing director, head of fundamental equities Asia, CPP Investments.

Masayoshi Son-led SoftBank invested in Flipkart three years after it sold its entire stake in the company to Walmart, the world’s largest retailer. Before its exit in 2018, SoftBank had earlier invested $2.5 billion in Flipkart, according to sources.

Lydia Jett, partner at SoftBank Investment Advisers, said SoftBank’s new investment in Flipkart is driven by its conviction in the company’s management.

Judith McKenna, president and CEO of Walmart International, said Flipkart is a great business whose growth and potential mirrors that of India as a whole.

Industry executives said that the funding would provide leverage for Flipkart’s plans to go public in the US by 2022. Analysts said the funding would also help Flipkart compete with players such as Amazon, Reliance’s JioMart, and Tata Group.

Tata Sons has announced the acquisition of e-grocery firm BigBasket. Cementing its foray into the online grocery market, Tata Sons, through its subsidiary Tata Digital, has acquired a majority stake in BigBasket at a $2 billion valuation.

Amazon has committed over $6.5 billion to the India market. It has been scaling up its investments in the country at a time when the Seattle-headquartered firm had signed off from China.

With more than 350 million registered users from across the country, Flipkart has been investing in key categories, including fashion, travel and grocery.

“We are optimistic about the growth prospects of e-commerce and digitalization in India and believe Flipkart is well-positioned to benefit from this growth,” said Sukumar Rajah, director of portfolio management, Franklin Templeton Emerging Markets Equity.

More than 300,000 registered sellers from across the country are on Flipkart’s marketplace, and 60 per cent are from tier 2 cities and beyond. Flipkart also works with more than 1.6 million kiranas in India through its wholesale business and its last-mile delivery program. The group is a majority shareholder in PhonePe, a payments app with more than 300 million users.

J.P. Morgan Securities (Asia Pacific) Limited and Goldman Sachs & Co. LLC served as placement agents to Flipkart in connection with this transaction, Hogan Lovells and Shardul Amarchand Mangaldas & Co served as legal counsel.